A new tranche of businesses have been fined for failing to meet their auto-enrolment pension obligations

Automatic enrolment of workplace pensions has now come into effect for companies with as few as 30 employees and it will soon embrace all employees, regardless of the size of business.

And The Pensions Regulator (TPR) has issued its first four escalated auto-enrolment penalties, which range from £50 to £10,000 a day depending on the severity of the breach.

Some 198 firms were served fixed penalty notices the first quarter of the year and, for the first time, the daily escalating penalty notices have been used.

As the employers hit with escalating penalty notices are likely to have staged between June and October last year, and the penalties are based upon the size of the employer, fines are likely to be £2,500 per day for every day the employer fails to become compliant.

The basic concept is that everyone must be automatically enrolled into a workplace pension scheme into which they put part of their salary and their employer also makes a contribution.

Workplace pensions have been around for decades, but the big shift is that workers have now to opt out rather than in. This is designed to tackle the growing older population who can no longer rely on the state pension for sustenance into an extended old age.

While employees have the choice to opt out of the workplace pension, it is mandatory for all employers. If businesses don’t comply, they could risk a penalty notice of anything from £400 to £50,000, depending on the issue and the size of the company.

All businesses in the UK must be compliant by 2018 at the very latest.

Auto-enrolment is part of the Government’s wider reorganisation of the pensions system given that many people have so far made inadequate provision for their retirement.

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